Draft Pick Compensation Can’t Be Assumed

I recently read an article in which the author considered it a near-certainty that the Phillies would've snagged two solid draft picks had Ryan Howard departed as a free agent after the 2011 season. That seems plausible on the surface – we know the Elias rankings don't use sophisticated numbers, and Howard seems like he would be a Type A lock.

However, a check of the 2008-09 Elias rankings for National League first basemen and outfielders shows that Howard ranked 23rd in the group at 76.296 points. He's a Type A, but the 27th-ranked player, Skip Schumaker, starts off the Type Bs at 69.394.

Several years ago, ESPN's Keith Law revealed that each league's 1B/OF groups are ranked based on five stats: plate appearances, batting average, on-base percentage, home runs, and runs batted in. Even though Howard tallied 1403 PAs, 93 HR, and 287 RBI over 2008-09, his pedestrian .265 AVG and .349 OBP knocked him well down the rankings. If Howard's 2010-11 production slips, he could easily be a Type B. Elias' formulas might not be the best way of ranking players, but they're part of the fabric of many multi-million dollar decisions. Looking ahead, the current collective bargaining agreement expires on December 11th, 2011, and we don't know if the formulas will be revamped.

Even if Howard did get Type A status, would the Phillies have offered arbitration? We've seen plenty of instances where players coming off good seasons were not offered arbitration – Johnny Damon and Randy Wolf are two recent examples. And there's always the chance the player accepts, like Rafael Soriano, Rafael Betancourt, and Carl Pavano did recently.

If a team makes it all the way to the point of a Type A free agent being offered arbitration and declining, there's a chance the draft picks gained aren't great. Look at the Blue Jays, received picks #34 and 80 for Marco Scutaro this year because the Red Sox also signed John Lackey. Scutaro's Elias number of 83.069 was just below Lackey's 83.865 figure. In the most extreme example, the Jays received picks #37 and 104 when Type A free agent A.J. Burnett signed with the Yankees a year prior. You're at the mercy of which team signs your free agent.

The point of all of this: you can dream of getting picks #19 and 33 for your big-name departing free agent, like the Astros did for Jose Valverde this year, but many factors can derail the plan along the way.

Comments

No guarantee to get 2 top picks – the following scenarios can prevent that from happening:

— Elias ranking improperly rates a players talent level
— Player accepts arbitration
— Team doesn’t offer arbitration
— Signing team is a bottom 15 team (only get a supplemental + 2nd round pick)
— Signing team has acquired one more more players who ranked higher
— Drafted player does not sign with the club

That’s a lot of “if’s”.

Then you have the issue with how effective teams are at drafting. For some teams, those picks are pretty worthless because they have a poor record of developing internal talent. For other teams those picks are very valuable due to their scouting and development departments.

Finally, you have to consider when those picks will be able to contribute at the ML level. For many teams, talent today is significantly more valuable than talent tomorrow. So a team like the Pirates would be smart to horde high draft picks and plan for the future. Conversely, a team like the Rays need to maximize the talent on their roster today in order to push for a successful season in ’10.

On the scouting thing, teams can’t really be that objective about things. I’m sure most teams think they are good at drafting and have just had a run of bad luck. So they’ll always value the picks, even if they have a long track record of getting little for them. So while it’s easy for us to say “Oh, a draft pick is worth more to the Marlins than the Astros” I highly doubt the Astros are saying “Sheesh, we suck, we should just stick with the talent we have on the field.” Even though their club looks like it was built on that principle…

Arguing that his Type A status is not guaranteed and may fall to Type B because of a slip in production does not support the argument that they did the right thing in locking him up. If his numbers decline that would actually support the opposite that maybe they should have or could have let him go. The most correct conclusion IMO is that they were premature and jumped the gun on this signing. If he is able to maintain his play he would have likely got the same deal in 2 years as a 32 year old. If his play declines they would have got him at a much friendlier rate and would have had a much better idea on possible draft pick compensation had they been considering that route.

Sorry my mistake. I thought that the article you read was discussing the option of the Phillies to let Howard walk to collect draft picks. It seemed as though you were adressing that alternative – by saying, among other points, that he might only get type B status. I was pointing out that in the unlikely scenario his play declines to only type B status worthy this deal would be a colossal failure and that they would have been better off with the compensation pick and avoiding an albatross of a contract.

All I remember is how screwed over the Brewers got for losing Sabathia and Sheets after the 2008 season. Granted, Sheets was injured and ended up not playing at all in 2009, but at the time everyone thought they would get some pretty high draft picks for losing two aces. Did not happen.

As a fan, I never want to hear “We get draft picks!” again. Draft picks are an uncertainty and often don’t pan out anyway.